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8150-8157 Public Auction: Notification of Sale – Procedures and Requirements

8150. OBTAINING NAMES AND ADDRESSES OF PARTIES OF INTEREST
The law requires the tax collector to make a "reasonable effort" to ascertain the names and last known addresses of parties of interest (Jones v. Flowers (2006) 126 S. Ct. 1708).  The validity of a sale is not compromised if any names cannot be obtained through reasonable effort (Rev. & Tax. Code §3701).

8151. PARTIES-OF-INTEREST SEARCH 
There are a number of ways to obtain the names and addresses of the parties of interest, such as purchasing a report from a local title company or a research company or having a member of the tax collector's staff search the public records. 

There are some advantages and disadvantages in contracting this job out to a title company or abstractor.  The basic advantage is the obvious saving in personnel time and labor.  Disadvantages include the high cost (ranging from $100 to $350), the time required to get a report, and determining the type of report that is required.  The tax collector should exercise caution when ordering a report from a title company.  Members of the California Land Title Association (CLTA) issue two types of reports:  litigation guarantees and trustee sale guarantees.  Either of these reports provides the necessary information to satisfy the statutes.  When using a title company that is not a member of CLTA, the tax collector should request its equivalent litigation guarantee report.  

There are also a number of companies that specialize in providing parties-of-interest reports to county tax collectors.

The type of report that is ordered is very important.  "Lot book," "judgment lien guarantee," or "property search guarantee" reports will provide only a portion of the needed information. 

In addition, the company should be asked to provide the following: 

1) A copy of the vesting deed; 

2) Mailing addresses of each party of interest; 

3) A copy of each of the recorded documents referred to in the report; and

4) A plat map of the property being searched. 

More information on conducting the searches can be obtained from the State Controller's Office staff at (916) 322-3918.  Another resource is the SCO's County Tax Sale Procedural Manual (Vols. I-IV).

8152. NOTICE TO TAXING AGENCIES AND NONPROFIT ORGANIZATIONS
All taxing agencies having jurisdiction over each subject property must be notified at least 30 days before the date of the first published or posted notice of sale.  A copy of the notice to the board of supervisors, along with its approval of the sale, must be included (Rev. & Tax. Code §3700).  Such notice may be mailed or delivered.  The tax collector may proceed with publication or posting without waiting 30 days if he/she has, on file, a written consent from each taxing agency (Rev. & Tax. Code §3700).

When a complete list of the parcels to be offered at public auction is sent to such taxing agencies, the parcels subject to their jurisdiction may be specified.

The tax collector may notify nonprofit organizations that have requested notification either prior to July 31 of the current calendar year or one year prior to the next scheduled tax sale (Rev. & Tax. Code §3700). 

8153. PUBLISHED NOTICE
The tax collector shall, pursuant to Revenue and Taxation Code section 3702, publish a notice of intended sale once a week for three successive weeks in:

1) A newspaper of general circulation published in the county seat; or

2) A newspaper of general circulation published in the judicial district where the property is situated.

If, in the judgment of the board of supervisors, any property to be sold will bring at auction less than the cost of publication in a newspaper, the publication of the notice of intended sale may be made in the same manner as if there were no newspaper published in the county seat or in the judicial district (Rev. & Tax. Code §3703).

The publication requirements for a public auction are found in M-9500.  For information on posting notice of impending sale, see M-9517.

8154. MAILING RECOMMENDATIONS
It is recommended that a requested return date not be printed on the envelope of a mailed notice to a party of interest (e.g., "Please return to sender within 10 days if not claimed.").

The sale may be voided if a requested return date is shown on the envelope (see the State Board of Equalization's Property Taxes Law Guide (Vol. 2) annotations to Revenue and Taxation Code section 3365, Numitor Gold Mining Co. v. Katzer, 83 Cal. App. 161; Sawyer v. Berkeley Securities Co., 99 Cal. App. 545).

All mailed notices returned by the postal service as undeliverable should be retained unopened as proof of mailing if needed for court evidence.  If envelopes are opened, it may be difficult to prove what notice was given, since the contents no longer remain sealed and intact.

NOTE:  When a notice is returned and the assessee is shown as deceased, the superior court clerk's office should be checked for a probate.  If the estate is in probate, the notice should be mailed to the administrator or executor of the estate.  If a probate cannot be found, the property should be withdrawn from the sale.  See M-8129 instructions for handling escheated and unprobated property.

8155. NOTICE TO PARTIES OF INTEREST
Not less than 45 days nor more than 120 days before the proposed sale, the tax collector shall send notice (by registered or certified mail) to parties of interest as defined in Revenue and Taxation Code section 4675.  A party of interest is defined as a person vested with title (which includes the current assessee) or a lienholder of record at the time the notice is given (Rev. & Tax. Code §3701).

NOTE:  "Parties of interest" may include assignees or successors in interest of former owners, purchasers of contracts of sale, and a wide variety of lienholders.  Liens of record filed by an individual or by a governmental agency (federal, state, county, or any political subdivision of a county) identify parties of interest.

The contents of the notice must include the date, time, and place of the sale, including the internet URL address in the case of an electronic auction, the amount required to redeem the property, the fact that the property may be redeemed up to the close of business on the last business day prior to the date the auction commences, and information regarding the rights of parties of interest to claim excess proceeds, pursuant to Revenue and Taxation Code section 4674, if the property is sold and excess proceeds result from its sale (Rev. & Tax. Code §3701).

If it is the tax collector's intent to re-offer unsold parcels at another sale within 90 days, the Notice of Intended Sale of Tax-Defaulted Property must also indicate the specific date, time, and location, including the internet URL address in the case of an electronic auction, of the new sale.

NOTE:  In addition to the initial parties of interest notification, a follow-up search for parties of interest must be conducted; if any new parties are discovered, notification pursuant to Revenue and Taxation Code section 3701 must be provided (Rev. & Tax. Code §3692(e)).

Form SCO 8-05.1 is recommended for noticing parties of interest in instances where the tax collector has no intention of re-offering unsold parcels pursuant to Revenue and Taxation Code section 3692(e).

Form SCO 8-05.2 is recommended for noticing parties of interest in instances where the tax collector intends to re-offer unsold parcels pursuant to Revenue and Taxation Code section 3692(e).

8156. NOTICE OF SALE TO IRS
Upon discovery of an Internal Revenue Service (IRS) lien, a notice of sale must be given, in writing, to the IRS. The notice must be sent by registered or certified mail or by personal service and must be received by the IRS not less than 25 days before the sale (IRC §7425(c), 26 USC §7425), Attorney General Opinion 12-21-79).  A sale may be voided if the IRS notice is not mailed to the district office of the IRS having jurisdiction over the properties subject to the IRS tax lien.

The notice must contain the following information, pursuant to Federal Procedures/Internal Revenue Regulations section 48:537:

1) Tax collector's name and office address;

2) Description of the property -- A copy of the Notice of Power to Sell and a copy of the assessor's parcel map are sufficient; 

3) The date, time, and place of the sale, including the Internet address in the case of an electronic auction;

4) The name and address of the taxpayer;

5) The approximate amount of the principal obligation, including interest, penalties, fees, and costs, to redeem the property and a description of any expenses (such as advertising cost, recording fee, state and county fees, and current taxes) that will be chargeable against the sale proceeds;

6) The name of the IRS district; and

7) The date and place the notice of lien was filed.

NOTE:   The required information listed in items 4, 5, 6, and 7 above is contained in the Notice of Federal Tax Lien.  A copy of the lien attached to the notice to the IRS is sufficient to fulfill the information requirements described in items 4, 5, 6, and 7.

8157. PERSONAL CONTACT OF ASSESSEE BEFORE SALE
If the property being offered for sale is known to be the primary residence of the last known assessee, personal contact must be made.  Primary residence can be determined by either discovering a valid homeowner's exemption on file with the county assessor in the name of the last known assessee or determining that the mailing address for the last tax bill is the same as the property address.

The tax collector or his/her agent shall make a reasonable effort to contact the owner-occupant of the property, in person, not more than 120 days nor less than 10 days prior to the date of sale (Rev. & Tax. Code §3704.7).

In the course of the personal contact, the owner-occupant must be informed of the following:

1) That the property, if not redeemed, will be offered for sale at public auction; and 

2) His/her redemption rights according to Revenue and Taxation Code section 4101 et seq.; 

If personal contact cannot be made after reasonable efforts, a reasonable attempt must be made to serve written notice, no less than five days prior to the date of the sale, disclosing the fact of the impending sale and that the tax collector's office should be contacted immediately regarding redemption (Rev. & Tax. Code §3704.7(b)).

The amount of actual and reasonable costs incurred may be recovered by the tax collector (Rev. & Tax. Code §4672.3).  This amount must be added to the required amount for redemption of the property (Rev. & Tax. Code §3704.7(c)).

Form SCO 8-05.3 has been designed as a means to document evidence of compliance with this requirement.

NOTE:  Failure to comply with the foregoing requirements does not invalidate any transfer of title as a result of sale (Rev. & Tax. Code §3704.7(d)).